LIMITED LIABILITY: If the company experience financial distress because of normal business activity, the personal assets of shareholders/owners will not be at risk of being seized by creditors.
SEPARATE LEGAL ENTITY: A company is a legal entity and a juristic person established under the Act. Therefore a company has legal capacity to own property and incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts
CONTINUITY OF EXISTENCE: The existence of company cannot be affected by owners. They may come, change and go but the company will run until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
MINIMUM NUMBER OF SHAREHOLDERS: The Minimum Members need to start the business are only2.
SCOPE OF EXPANSION IS HIGHER: A company has various options for borrowing of funds. It can raise funds by issuance of shares, debentures etc. Even banking and financial institutions prefer to render large financial assistance to a company rather than partnership firms or proprietary concerns.
EASY TRANSFERABILITY OF OWNERSHIP: The Ownership(shares) of Company is easily transferable by a shareholder to any other person after Filing and signing a share transfer form at any price mutually agreed between both. Therefore, the Capaital infused can be taken back easily
OWNING PROPERTY: A company being a legal person, can acquire, own, enjoy and alienate, property in its own name. No shareholder/director can make any claim upon the property of the company so long as the company is a going concern.
CAPACITY TO SUE AND BE SUED: The company being legal person has full right like a natural person to institute legal proceedings against or to bring a suit in a court of law and also can be sued in its own name.
MULTIPLE RELATIONSHIPS: In a company a person can at the same time be a shareholder, creditor, director and also an employee of the company.